VAT Registration Problems Continue
Sadly Steve Allen died in July 2011. His wife Leah would like to thank all those who know Steve and helped contribute to his success. She has recommends Steve's clients and anyone who is interested in this article topic to contact Rob McCann from “The Vat people” on (tel) 0161 477 6600 . Please make reference to Steve Allen.
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Despite its best intentions to improve matters, HMRC continues to inflict
long delays on businesses applying for VAT registration. In the worst cases,
some businesses could fold as a result of lost turnover or delayed VAT
An announcement at the beginning of November from Jayne Kennedy, Financial
Secretary to the Treasury, confirmed what most people were already thinking, in
that the recently self-imposed target of processing 70% of cases within 14 days
by the end of January 2008, is unlikely to be met by HMRC. The processing
figures for September 2007 showed that HMRC had only managed to process 20% of
cases in 14 days (up a mere 6% on the August figure). There was more than a hint
of understatement from Ms Kennedy when stating “HMRC is working towards a
target. However, it will be a challenge for them given the constraints they
The VAT registration situation is being brought up regularly in Commons
debates, and is of great concern to MPs from all of the main political parties.
The number of registration complaints received by HMRC in the year to April 2007
was 851, more than double the 410 figure for the previous 12 months. In the
past six months alone, however, 829 complaints have been received, with many
more expected as the delays continue.
A recent article in The Independent newspaper highlighted some of the
potentially catastrophic effect of the delays, referring to one business in
Stoke-on-Trent, Eurostar Global Electrics, which has been waiting for a VAT
number for 9 months and counting. The company, which trades with companies in
Europe, has already lost £480K in turnover (and £34K in profit) due to their
customers’ insistence that they be VAT registered. The company, which has had to
cancel its expansion plans, is currently in a net VAT repayment position of
£110K, and the delay in receiving this refund may well now result in the
(otherwise profitable) business going under, according to its Managing Director.
The plight of the company is currently being taken up with the Paymaster General
by the local MP, Robert Flello.
Unfortunately, there isn’t any good news on this issue, as even the 1 October
2007 restructuring of the VAT Registration Units has hit problems. The plan was
for Wolverhampton to be become a national processing unit for all standard
applications (with Grimsby handling VAT68, VAT group, Annual Accounting and Flat
Rate Scheme applications). However Wolverhampton cannot now take on all
applications until December, so Camarthen and Newry will continue to process
cases for their postcodes in the interim.
Not wishing to be outdone by its paper-based rival, HMRC’s online
registration function has also got in on the act recently, following news that
the usual ability to apply for registration up to three months in advance will
be temporarily unavailable until January 2008. Apparently, there is an ‘issue’
with the IT systems which means that an application made in 2007 cannot be
processed if it involves a 2008 registration date!
Logically, things should steadily improve, but with HMRC, you just can’t be
About the Author
Steve Allen is the
Director of VAT Solutions (UK) Ltd, an established independent firm of Chartered
Tax Advisers, formed by Andrew Needham and Steve Allen. Both not only are
respected tax advisers, but have worked for both Customs & Excise and one of the
top four accountancy firms for many years. This mean that their team know both
sides of the equation and are truly experts in this field.
The company has a cross-section of clients from multi-national companies
through to medium-sized and numerous smaller regional firms of accountants and
solicitors. They produce a regular publication 'VAT Voice', which can be
downloaded directly from their website
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Article Published/Sorted/Amended on Scopulus 2007-11-26 00:48:29 in Tax Articles